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Consumer rights: Holiday insurer's small print left my sister out of pocket

What are your rights when a company gives you a below-par compensation offer ... And a retailer refuses point blank to replace a faulty electrical item?

Q. My sister paid £74.79 for travel insurance for a trip around Europe. After leaving Budapest, all her travel documents (InterRail ticket, passport, health card etc), as well as cards, money, and photo cards were stolen and she was stranded. Her travelling companion lent her money to get back to Budapest to get a report from the police and to go to the consulate about her passport. She stayed there until a new passport was issued.

She then decided it would be sensible, and no more cost, to return home, wait and collect her cards and health cover and so on, and then fly back out to Rome to resume her trip and catch up with her schedule. While at home, she filled out the insurance claim and provided all the necessary paperwork to accompany it. Her claim was for £684.48.

The insurance firm says that there is £100 excess, and that they won't pay for her flight home or back to Rome or for her cancelled hostel fees, which were incurred when she had to stay in Budapest.

This suggests she will be unlikely to recover more than half the amount she has claimed.

She selected the insurance policy with an eye to good health cover, which seemed sensible. However, she naively thought she would be well covered generally. This doesn't seem to have been the case. She was lucky that a friend was able to lend her money, but things would have been very different for her had she been on her own, as she has been for a large part of her trip. What can she do?



A. Your sister is home from her travels and has been dealing with this since you first contacted me. You were right about the amount the insurance company finally came up with. They made her an offer of around half of the amount she claimed. I advised her to write again restating her case, which she did, and has been sent a cheque for £342.55. She has written again saying that she does not accept this amount "in full and final settlement" of her claim and is holding the money in a separate account.

It seems that she has taken her claim as far as she can with the insurance company itself. The next step is to get a second opinion on whether or not the firm has been fair in its decision and offer, considering the terms set out in the policy. Malcolm Tarling from the Association of British Insurers says: "Anyone who has a dispute with their travel insurer should first try to resolve it with the company concerned. Insurers take any complaint seriously, and will always look to resolve any dispute as quickly as possible. If it can't be resolved following escalation to the head office, then the policyholder can approach the Financial Ombudsman Service (FOS) to ask for their complaint to be reviewed.

So the options now are to: Make a claim through the small claims procedure at the County Court for the rest of the money and let the judge decide; that means paying a fee and possibly throwing good money after bad if the decision goes in favour of the insurance company; or complaining to the Financial Ombudsman. Someone in the Ombudsman's office will look at the policy, the claim, the circumstances of the case and at the money the insurer has offered and decide whether or not it's a fair amount. If the Ombudsman decides the insurer has been fair, at least your sister will know she's done all she can. Look at financial-ombudsman.org.uk for details on how to complain.

Your sister did the right thing by shopping around for the best policy. In this case she was looking for the best health cover, and if she had been taken ill it may well have proved to be great value for money. But it didn't cover her as well as she expected for everything else. The best you can do is read the small print of every policy you're considering; know exactly what you're covered for and exactly what you're leaving to chance. Insurance policies never cover all eventualities. If they did you wouldn't be able to afford them.

Q. I recently got married and a friend gave me a food mixer as a present. It's an expensive one with all sorts of tools and attachments. The first time I tried to use it the blades in the bowl wouldn't work. My friend had told me which shop she bought it from, but when I took it back they refused to give me a refund or a replacement and said that it didn't come from their shop and, anyway, I must have broken it. In short, they're not prepared to do anything to help. I know they're obliged to sort this out, so what do I do now? If it was just a hand mixer, I probably wouldn't bother.



A. The retailer should put this right. However the shop's contract is with the person who bought the mixer and not you. You should ask her to go back to the shop and reject the mixer. It is faulty and so under the Sale of Goods Act she's entitled to a refund or a replacement – whichever she's happy with. She should take proof of purchase. In the Act, there's nothing that says she must have a receipt. Proof of purchase can be a receipt or bank statement, card slip or statement, even the word of someone who was with her in the shop and witnessed her buying the goods. So even if she's lost the receipt she shouldn't be put off.

A lot of shop managers and staff don't know their customers' rights and that may be the case here. If the goods are faulty, she should reject them within a reasonable time, so do it sooner rather than later. If the shop refuses to play ball, make sure she's dealing with someone who has the power to sort it out, and if she isn't then she should ask to speak to the manager. Quote the Sale of Goods Act to him or her, and if that fails, make it clear that you know the law is on your side and explain that you're going to talk to the Trading Standards department at your local authority. You can go to see them, or call Consumer Direct on 08454 040506.

If the mixer cost more than £100 and she paid by credit card, the card company has equal liability and should sort out the problem for her. If all else fails, you can take the retailer to the County Court, under the small claims procedure, but it shouldn't come to that.